Friday, April 02, 2010
The $200 Billion Opportunity
Ericsson’s CEO Hans Vestberg was in the U.S. last week and spoke with a number of news outlets. If you didn’t see any of the coverage, definitely required reading if you want to begin to understand where the next significant opportunity lies for equipment manufacturers.
What were the key points? For starters, the market for Telecom services, those which help carriers deploy and maintain their network infrastructure, is a $200 billion market. And second, that two-thirds of the global market is still controlled by the carriers themselves.
This is a story – and opportunity – about growth. Through recent M&A and the rise of new players the competition in the OEM space is white hot, which means that traditional revenue streams may not be as abundant as they once were.
By grabbing a slice of the services pie, OEMs are bringing an important value-added service to the table and creating some much needed ‘stickiness’ with their clients. In a competitive marketplace, the more ingrained you are in your client’s business the harder it becomes for the client to think about conducting business with someone else.
Are other OEMs on to this opportunity? You bet. In their 2009 annual report, for example, Huawei notes that they had been awarded more than 100 managed services contracts by year’s end.
So, the cat’s out of the bag when it comes to the opportunity surrounding multi-vendor service agreements. Biggest question I have for OEMs is ‘now that you’re responsible for servicing other company’s gear, how are you going to maximize the value – and use – of those assets to your client’s satisfaction?’
